118 STAT. 1505 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(A) QUALIFIED INVESTMENT ENTITY.— ‘‘(i) IN GENERAL.—The term ‘qualified investment entity’ means— ‘‘(I) any real estate investment trust, and ‘‘(II) any regulated investment company. ‘‘(ii) TERMINATION.—Clause (i)(II) shall not apply after December 31, 2007. ‘‘(B) DOMESTICALLY CONTROLLED.—The term ‘domesti cally controlled qualified investment entity’ means any qualified investment entity in which at all times during the testing period less than 50 percent in value of the stock was held directly or indirectly by foreign persons.’’. (4) Subparagraphs (C) and (D) of section 897(h)(4) are each amended by striking ‘‘REIT’’ and inserting ‘‘qualified investment entity’’. (5) The subsection heading for subsection (h) of section 897 is amended by striking ‘‘REITS’’ and inserting ‘‘CERTAIN INVESTMENT ENTITIES’’. (d) EFFECTIVE DATE.— (1) IN GENERAL.—Except as otherwise provided in this sub section, the amendments made by this section shall apply to dividends with respect to taxable years of regulated investment companies beginning after December 31, 2004. (2) ESTATE TAX TREATMENT.—The amendment made by subsection (b) shall apply to estates of decedents dying after December 31, 2004. (3) CERTAIN OTHER PROVISIONS.—The amendments made by subsection (c) (other than paragraph (1) thereof) shall take effect after December 31, 2004. SEC. 412. LOOK THRU TREATMENT FOR SALES OF PARTNERSHIP INTERESTS. (a) IN GENERAL.—Section 954(c) (defining foreign personal holding company income) is amended by adding after paragraph (3) the following new paragraph: ‘‘(4) LOOK THRU RULE FOR CERTAIN PARTNERSHIP SALES.— ‘‘(A) IN GENERAL.—In the case of any sale by a con trolled foreign corporation of an interest in a partnership with respect to which such corporation is a 25 percent owner, such corporation shall be treated for purposes of this subsection as selling the proportionate share of the assets of the partnership attributable to such interest. The Secretary shall prescribe such regulations as may be appro priate to prevent abuse of the purposes of this paragraph, including regulations providing for coordination of this paragraph with the provisions of subchapter K. ‘‘(B) 25 PERCENT OWNER.—For purposes of this para graph, the term ‘25 percent owner’ means a controlled for eign corporation which owns directly 25 percent or more of the capital or profits interest in a partnership. For purposes of the preceding sentence, if a controlled foreign corporation is a shareholder or partner of a corporation or partnership, the controlled foreign corporation shall be treated as owning directly its proportionate share of any such capital or profits interest held directly or indirectly by such corporation or partnership.’’. Regulations. 26 USC 871 note.
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